The Controversy Over the ‘Liberation Day’ Tariff Formula

When the Office of the U.S. Trade Representative introduced the “Liberation Day” tariff formula in April 2025, economists immediately found issues. The formula, filled with Greek symbols and citations of academic sources, appeared credible at first. However, upon inspection, it was clear that the sophistication faded quickly. Key terms in the formula nullified each other, resulting in a simple calculation based on bilateral trade deficits.

One economist, noticing these discrepancies, filed a Freedom of Information Act request to obtain records detailing the formula’s development. Despite over a year of delays and missed deadlines, the U.S. Trade Representative’s office eventually acknowledged the existence of 31 pages of relevant records but refused to release any of them. The office claimed that these records were protected due to communications between the agency and the White House Council of Economic Advisers regarding the tariff calculations. Whether this claim holds up in court remains to be seen, but it does not address a more significant concern.

From the economist’s perspective, if the economic rationale behind these tariffs was robust, why is the government so keen to keep its research hidden? Why wouldn’t the Council of Economic Advisers endorse a document they allegedly helped prepare? These questions call the transparency and credibility of the process into question.

The Liberty Justice Center, which has represented businesses contesting the administration’s tariff actions in federal court, shares these concerns. These undisclosed 31 pages appear as part of a larger pattern of changing legal justifications for the tariff policy. Initially, the tariffs were justified under the International Emergency Economic Powers Act, claiming it provided presidential authority for global tariffs. After courts rejected this theory, the administration turned to Section 122, a temporary trade law limited by Congress to 150 days. When that authority was challenged and later expired, the administration resorted to Section 301, involving a forced-labor investigation to enforce another broad tariff program.

This evolving legal rationale raises questions: Is the administration constantly seeking new legal and economic justifications to maintain the same tariff policy despite earlier failures? Viewed individually, each legal shift might be defended; collectively, they tell a different story. This issue now resides with the courts. Yet, the FOIA denial accentuates the same concern from another angle. Are legal and economic arguments being crafted to support a predetermined policy?

The Council of Economic Advisers’ involvement is crucial. Known for delivering objective economic analysis to the president, their participation implies that they contributed to discussions about tariff calculations. If council economists doubted the formula’s validity, the public should know. If they supported it, that too should be transparent. Concealing the entire record under executive privilege only deepens the mystery.

One academic source controversially cited by the administration was a working paper by economists Pau Pujolas and Jack Rossbach. A link to the paper featured in a speech defending the tariffs, but one author later stated that the administration misused their research to justify the opposite of their findings. This incident reveals that at least one cited source was publicly contested by its authors.

The withheld 31 pages might disclose whether anyone in the government recognized this issue before publishing the formula, whether any concerns were raised, or whether it was entirely overlooked. By withholding these pages, the government prevents us from knowing. While reasonable people may differ on tariffs and trade policy, the executive branch owes the public a clear explanation for policies impacting billions in commerce. When the government requests judicial deference, business trust, and public acceptance of expansive economic policies, it ought to demonstrate transparency.

What is the administration afraid the public will discover?

Phillip W. Magness is the David J. Theroux Chair in Political Economy at the Independent Institute. Sara Albrecht is chairman and CEO of the Liberty Justice Center, representing businesses challenging the administration’s tariff actions.